Arbitrage sports betting is a strategy that involves placing bets in a way that lets gamblers exploit discrepancies in odds across different bookmakers. But how does it actually work, and does it really harm betting businesses? This article delves into these questions and reveals how KYC tools are used to detect arbers.

What is Arbitrage Sports Betting?

Arbitrage sports betting involves placing multiple bets on all possible outcomes of a sporting event across either different bookmakers and gambling platforms or even the same betting company. These bets are placed in such a way that no matter which outcome occurs, the person betting makes a profit. This is possible because bookmakers sometimes have differing opinions on the probabilities of outcomes, leading to variations in the odds they offer. 

How Does Arbitrage Sports Betting Work?

Generally, arbers try to identify games or matches where different bookmakers offer significantly differing odds. They can achieve this manually or by using arbitrage betting software that scans multiple bookmakers and highlights potential opportunities. 

Let’s say there’s a tennis match between Person A and Person B. 

Arbitrage opportunities occur when for the same event, one bookmaker is offering odds of 2/1 for Person A to win the match. Meanwhile, another bookmaker is offering odds of 2.5/1 for Person B to win.

The gambler calculates the odds and bets $100 on Person A, and $80.89 on Person B. A total stake of $180.89.

In this example, if Person A wins the tennis match, the gambler gets $200. That’s a $19.11 profit. If Person B wins the match, the gambler receives $202.22 with a $2.22 profit. Regardless of the outcome, the bettor wields a minimal profit with arbitrage bets. Although small, the two bets allow them to win consistently and build up the winnings over time. 

The Legality and Business Impact of Arbitrage Sports Betting

Arbitrage sports betting is legal in regions where gambling is permitted. However, it poses a challenge for betting companies, which often prohibit such practices in their terms and conditions. When detected, bookmakers might limit bets, cancel bets, or even shut down accounts.

Despite the risk, many arbitrage bettors are attracted by the guaranteed profit of the bet and choose to ignore the terms and conditions of gambling sites. This poses a challenge to said betting companies as they struggle to find a way to stop arbitrage bettors. 

Detecting Arbers: Tools and Strategies

To counter arbitrage betting, bookmakers use several strategies and tools:

1. Bet Limits: Restricting the amount a user can bet.

2. Bet Cancellation: Voiding bets suspected of being part of an arbitrage strategy.

3. Account Closure: Shutting down accounts involved in arbing.

Using AML/KYC Tools to Detect Arbers and Avoid Arbitrage Betting

Bookmakers employ advanced AML (Anti-Money Laundering) and KYC (Know Your Customer) tools to identify and prevent arbitrage betting. These identity verification tools and techniques help maintain the integrity of betting platforms and ensure compliance with legal and regulatory standards. 

Liveness detection involves the use of biometric identification technologies to verify that a real person is interacting with the system in real-time, rather than a recorded video or photo. This technology is crucial for preventing the creation and use of multiple accounts by the same individual, a common tactic employed by arbers to spread their bets across different accounts and avoid detection. Biometric checks can include:

  • Facial Recognition: Comparing the bettor’s live image with the image on file.
  • Eye Movement Tracking: Ensuring natural eye movements that are difficult to replicate with static images or videos.
  • Voice Recognition: Verifying identity through voice patterns during customer support interactions or when using voice-enabled applications.

AML screening involves checking the bettor’s details against external databases and watchlists to flag users involved in financial crimes. This process helps in identifying potential arbers who might also be engaging in other illegal activities. 

Bank card verification ensures that bettors use pre-approved and legitimate payment methods. This process helps in detecting and preventing fraud and arbitrage by confirming the authenticity of the payment sources. 

Additional Techniques for Detecting Arbers

In addition to the primary tools listed above, bookmakers employ various other strategies to detect and prevent arbitrage betting:

Betting Pattern Analysis

By analysing betting patterns, bookmakers can identify unusual betting activities that may indicate arbitrage. These analyses focus on:

  • Bet Timing: Identifying bets placed simultaneously across multiple platforms.
  • Bet Amounts: An arbitrage bet will often be of an unusual amount that does not fit the typical behaviour of recreational bettors.
  • Odds Exploitation: Noticing consistent betting on odds that are known to be exploitable for arbitrage.
  • Frequent withdrawals: Arbers tend to withdraw their money more frequently than regular bettors. 

Machine Learning Algorithms

Advanced machine learning algorithms are deployed to continuously monitor and analyse bettor behaviour. These algorithms can learn and adapt to new betting patterns, improving their effectiveness over time. They help in:

  • Behavioural Profiling: Creating detailed profiles of normal betting behaviour to identify anomalies and people taking advantage of arbitrage opportunities.
  • Risk Scoring: Assigning risk scores to sports bettors based on their activity, helping to prioritise further investigation.

Geo-Location Tracking

Geo-location tracking helps in ensuring that bettors are not circumventing location-based restrictions, which is often a tactic used by arbers to access different odds from various regions. This includes:

  • IP Address Monitoring: Tracking the origin of the bettor’s internet connection.
  • Device Fingerprinting: Identifying unique device characteristics to prevent the use of multiple accounts from different locations.

Last Thoughts

Arbitrage betting offers a way to secure guaranteed profits from sports betting, exploiting market inefficiencies. However, bookmakers are constantly evolving their strategies to detect and limit this practice. By understanding both the mechanics of arbitrage betting and the countermeasures employed by bookmakers, bettors and industry professionals can better navigate this complex landscape.

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    FAQ

    Arbitrage betting is legal, however, frowned upon by betting sites and often faces restrictions from them.
    By placing simultaneous bets on the same horse with a bookmaker and against it, bettors can quickly secure profits. The markets for football, basketball, and tennis also see considerable activity in arbitrage betting.
    Yes. One of the biggest risks with arbitrage betting is that sportsbooks may limit or ban your account if they detect this betting strategy. Since arbitrage betting wil guarantee profit for the bettor and losses for the sportsbooks, this practice is generally frowned upon.
    There are two main strategies used in order to detect arbitrage:

    Looking for red flags such as unusually large bet sizes, repeated bets, and frequent withdrawals.
    Implementing liveness detection to verify account ownership and identify users with multiple accounts.